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TIME: As President of the new Russia, it makes you a petroleum executive, it makes you a television executive. Do you have relationships with big industrial leaders around the world and do you study their practices? How hands-on are you as a business executive?
PUTIN: Well, for myself, I established a set of rules for dealing with businesses, even at the time when I worked as first deputy mayor of St. Petersburg, I do believe these are the people on which much of our economy depends. I'm speaking about budget revenues, social issues, job creation, creating appropriate conditions for citizens to work. These people, as we say, are captains of industry, their main task is to generate profit. That is the essence of their activity. Yet that is not the main purpose and task for the state. The main task for the state is to improve the standard of living and prosperity of the people. I've always believed that you have to have good and friendly relations, but they must know that despite their being owners of major assets, they must all live by the law, like any other citizen. So that they have no illusion that they are allowed to do otherwise, I exercise an arm's-length principle, which I developed during my work in St. Petersburg, working with people of whom I have the highest respect.
TIME: Could you speak to us about the state's role in regulating or curbing Russian industrialists? There have been some very notable cases where there have been arrests and seizures of companies. Why were they seized and their owners arrested?
PUTIN: Well, thou shalt not steal. They didn't have difficulties with me. They had difficulties with the people of the country and with the law. When people do not live by the law, and thus get rich, while dozens of millions of Russians at the same time lose their meager lifetime savings, that creates distrust and alienation. My task was, as I've seen it, first of all, to teach everyone to live by the law, abide by the law, regardless of the thickness of their checkbooks. Secondly, to make our business more socially responsible and to remove the wall of alienation between the population and Russian business. We need business to understand its social responsibility, that the main task and objective for a business is not to generate extra income and to become rich and transfer the money abroad, but to look and evaluate what a businessman has done for the country, for the people, on whose account he or she has become so rich. And lastly, we have to do everything to defeat poverty.
TIME: It seems Russian people genuinely support the President. However, many also believe that some of the people closest to you are getting rich through corrupt means. There might be a tolerance for that as long as incomes are growing and everyone's getting richer. But that's not possible to do every year. Is there the threat of social upheaval at a point where living standards do not continue to increase, and if the perception of corruption gets worse?
PUTIN: If the standard of living is improving then there will be no threat of social upheaval or explosion. But we could not be satisfied with that. You said that some people got rich because of corruption. Then you know who and how. Write to us, to the Foreign Ministry, if you are so confident, then I presume you know the names, you know the systems and the tools, and I can assure you and everyone who would listen to us, watch us and read us, that the reaction would be swift, immediate, within the prevailing law. In recent years, I was not only talking about the problem, but I made sure law-enforcement agencies and NGOs did not tolerate this.
TIME: Long centuries of Russian history have exposed a paradox: only a centralized, autocratic power, be it under the Czars or the Bolsheviks, could hold such an enormous country together. However, the same autocratic regime twice led this country to breakupsin 1917 and 1991precisely because it had been stifling and arresting its development, which required individual initiative, decision-making and entrepreneurshipthe very qualities restricted by autocratic government. What is your solution to this paradox?
PUTIN: This is indeed one of the most difficult and complicated questions: how to organize the authority and the system of power. The authority in Russia should be strong enough to ensure sovereignty, security and defense. It should be strong enough to ensure territorial integrity of the country. At the same time, it must be responsive to regional and municipal sensitivities, and to sensitivities of citizens.
TIME: Then why did you abolish elections of regional governors?
PUTIN: That's untrue.
TIME: Well, to be precise, you abolished direct elections of the regional governors by a popular vote. So you don't believe at this stage the people can be trusted to elect their governor directly?
PUTIN: The thing is that unfortunately civil society is not mature enough. And as soon as people reach the heights of the governorship, they abandon the needs of the population. We cannot afford this. Today in the Russian Federation, given its enormous territory and national ethnic entities, I believe that this option, as was suggested by me, is optimal for here and now. The people by direct secret vote elect their deputies who elect a governor as proposed by the President. Thus we achieve a situation where a leader of a region is directly tied to the general interests of the nation and should be sensitive to regional issues.
TIME: But you just criticized a similar mechanismthe U.S Electoral Collegeas archaic. Why then such an approach at this stage of Russian society?
PUTIN: Our mode of developing the authorities in the region is much more advanced than in other countries. In India, governors are directly appointed by New Delhi. In France, prefects are appointed directly by the government. In the United Kingdom, in Her Majesty's government, there is a Minister for Northern Ireland, there is a Minister for Scotland, and there the main authority rests. Whereas at the municipal level, as we say in Russia, the chimney is not so high and the smoke is not that thick. That's in fact what we're doing too.
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